Let private-sector successes cure state's sickness - Times LIVE
Thu Apr 27 13:01:40 SAST 2017

Let private-sector successes cure state's sickness

David Shapiro | 2013-02-19 00:14:47.0

During an appearance on Summit TV last week, presenter Zukelwa (Zuki) Solomon caught me off- guard asking, tongue-in-cheek, what I thought Finance Minister Pravin Gordhan would not include in next week's budget.

The Pavlovian response would have been to propose a reduction in the marginal rate of tax for individuals. Although I fall into the camp that believes shrinking income tax would reduce the size of government, toughen the private sector and, in time, boost trade and expand employment, there is as much chance of that happening as there is of the cabinet swapping their X6s for Corollas.

Over the years I have only had praise for Treasury and for the Reserve Bank. Former minister Trevor Manuel is revered in world financial circles, and his name is often cited as a possible candidate for some or other senior position in an important global institution. The international community is developing similar admiration for his successor, Gordhan.

Still, year after year, when delivering their annual budget speech to parliament, the ministers seem to devote an inordinate amount of time calling attention to increases in social spending for the needy, almost to the point of identifying by name the millions of recipients who will benefit from these grants.

I recognise South Africa is a relatively poor country where swarms of the population are jobless, have no access to health care or, in so many cases, a decent meal, and acknowledging their plight in such a high-profile speech gains the incumbents political mileage.

I am surely not going to suggest we reduce these subsidies, but, in addition to noting these generous handouts, I would urge the minister to pay appropriate tribute to our resilient, brave and hard-working corporate sector that, under the most trying circumstances continues to produce the revenue - and accordingly the vital taxes - necessary to finance these wide-ranging assistance programmes.

Management of these enterprises operate in an environment where labour demands higher wages without the recompense of increasing productivity, and where government bureaucrats monitor who they hire and where they source their materials and supplies. These businesses are compelled to distribute their produce using ageing infrastructure, protect themselves against corrupt officials, criminal gangs and an assortment of other swindlers, and, on top of that, face increasing energy and administrative costs that are beyond their control.

They deserve the country's respect and veneration.

Equally worthy of a mention are the comparatively small percentage of taxpayers who contribute the lion's share of the nation's personal tax revenues. They obediently pay their dues on time despite receiving little in return - elected officials siphon off their contributions for personal use, state hospitals are in a scandalous state of disrepair, public schools are desperately understaffed and the police force remains short of skills and equipment.

Regardless, they seldom threaten to withhold their payments, always in the trust that things will eventually come right. Yet, reflecting on the latest auditor-general's report released a short while ago, we're far from coming right.

According to the report, more than 80% of municipal offices and more than 50% of government divisions do not maintain adequate books and records. It's an appalling statistic. In simple terms it means these delinquent, taxpayer-funded units are not properly accounting for the monies they receive and spend, or not enough to satisfy the strict standards of accepted accounting practice.

The South African business sector is acclaimed internationally as a leader in the field of corporate governance and the abysmal failure of government-administered departments to match these standards is indefensible.

It's time for government to start delivering on its mandates and promises. It can begin by holding each one of its appointed officials accountable for every cent they receive and spend. Only then will we finally get a grip on the corruption, sleaze and waste that is eating into our public finances, polarising our community and tarnishing our country's reputation as an investment destination.

Last week I wrote about the success of a certain Nordic region's moves to allow the private sector to run its public institutions. Although not directly Gordhan's brief, something he could endorse next Wednesday would be to recommend that highly successful groups such as Medi-Clinic, Life Healthcare and Netcare be appointed to administer our state hospitals; or to suggest Advtech (Crawford College, Varsity College, etc) and Curro Holdings (the affordable private schooling group) be consulted to aid education policy; or to announce that from now on Koos Bekker (CEO of Naspers) would be responsible for guiding the country's broadband strategy. That would be something to ululate about.


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